Merit review MA03/18

Nature of the decision: Whether the Insurer is entitled to refuse payment of statutory benefits

Our reference: MA03/18

Determination

This determination relates to a merit review matter, which is a reviewable decision under Schedule 2(1)(s) of the Motor Accident Injuries Act 2017 (the Act).

The merit review matter is about whether the Insurer is entitled to refuse payment of statutory benefits in accordance with section 3.35 of the Act, on the basis that the claimant failed to comply with a request by the Insurer under section 3.35(4) of the Act to make a claim for workers compensation.

My determination of the Merit Review is as follows:

The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:

The Insurer may not refuse statutory benefits under Part 3 of the Act for the claimant on the basis of any of its interactions or correspondence with the claimant to date.

The Insurer requires the claimant to make a claim for workers compensation for the injury with the relevant workers compensation insurer, in accordance with section 3.35(4) of the Act, within 10 days of the date on which the claimant receives this determination.

The reasons given for this merit review determination are the reasons for this substituted decision of the insurer. * Effective Date: This determination has effect from the date of decision. A brief statement of my reasons for this determination are attached to this certificate.

Reasons

Background

There is a dispute between the claimant and the Insurer as to whether the Insurer is entitled to refuse payment of statutory benefits to them under section 3.35(2)(b) of the Act.

The claimant was injured in a motor vehicle accident in January 2018. At the time of the accident the claimant was driving to their workplace to attend the second shift on a “split shift” roster for the day.

The claimant had attended work that morning between the hours of 10.00am and midday. They went home and were returning to work for the commencement of a 2.00pm shift when they were involved in the accident.

The claimant completed an Application for personal injury benefits which was lodged with the CTP Insurer. The date on the application is January 2018.

In February 2018, the Insurer wrote to the claimant declining liability for personal injury benefits on the basis that they were not covered by the compulsory third-party scheme.

The claimant’s legal representative made an application for internal review with the Insurer on their behalf in March 2018. The Insurer conducted the review and wrote to the claimant in April 2018 indicating that it maintained the original decision to decline liability for personal injury benefits on the basis that they had failed to comply with a request by the Insurer to make a claim for workers compensation in respect of their injury.

The claimant disputes that the Insurer requested that they make a claim for workers compensation in accordance with the Act and further asserts that such a claim has been made and declined, but that they have no formal notification of the declinature.

An application for merit review was lodged with the Dispute Resolution Service in April 2018 in accordance with section 7.12(1) of the Act and the Motor Accident Guidelines (the Guidelines).

Documents and information

I have considered the documents provided in and submitted with the application and the reply.

Submissions

The claimant’ submissions in support of their application for merit review are summarised below:

They were injured in an accident in January 2018 while driving to work. They were hit from behind by another vehicle.

The accident was reported to the police.

They have had significant treatment and have been unable to return to work.

The Insurer sent a letter to the claimant dated February 2018 in which it indicated that it had made a decision that there was no cover under the compulsory third-party scheme because there were potential workers compensation rights available.

In the abovementioned letter, under a section titled “What do I need to do now?”, the following is written:

“We recommend you contact your workers compensation insurer to discuss the next step”.

The Insurer has the information wrong. What had in fact occurred was not that the accident happened during their lunch break but rather that they were returning to work between shifts. This was their usual practice as they were traveling from home to their place of employment in accordance with the definition under section 10 of the Workers Compensation Act 1987.

An internal review of the Insurer’s decision was sought in March 2018. The request was first made by telephone and then by email.

It has been made clear to the Insurer that the claimant worked two shifts on each day that they worked. The first shift commenced at 10.00am and concluded at Midday and the second commenced at 2.00pm and concluded later that day. The two hour break was not a lunch break or an absence during which they were paid but a break between the shifts of a casual employee. Accordingly, they will be disentitled from claiming benefits under the Workers Compensation Act 1987 as there was no substantial connection between their employment and the accident.

The claimant has not been able to obtain workers compensation benefits and has been told by their employer that the claim has been refused on the basis that the accident occurred on “a road”. They have not been given formal notification of the refusal.

The claimant lodged their claim with the employer over two weeks ago and has not had any compensation back from an insurer but has had further confirmation of declinature from their employer.

The claimant has been without any form of income since the date of the accident as they have been unable to return to work

The Insurer’s submissions in its response are summarised below:

The claim made by the claimant for personal injury benefits is not covered under the Act.

The Insurer has considered whether it is entitled to refuse payment of statutory benefits in accordance with section 3.35 of the Act.

In a conversation with the claimant in February 2018, the Insurer was informed that the motor accident occurred during their lunch break when they were on their way back to work. As the accident occurred during a lunch break, this was considered to be during the course of their employment for that day. Accordingly under section 3.35(4) of the Act, the Insurer has reasonable grounds to consider that workers compensation is or may be payable in respect of the injury concerned.

In February 2018, the Insurer gave notice to the claimant that the Insurer required them to inform their employer of the motor accident.

As the Insurer was unable to confirm that workers compensation was not payable, in February 2018 the Insurer declined liability for the first 26 weeks of statutory benefits.

The Insurer recommended that the claimant contact the appropriate workers compensation insurer to discuss next steps.

As per the requirements under section 3.35(2)(b) of the Act, the claimant failed to comply with the Insurer’s request to make a claim for workers compensation in respect of the injury concerned.

The Insurer relied on section 3.35(3) of the Act in deciding that there was no cover for CTP scheme statutory benefits. At the time of the decision the Insurer had not received any formal notification from the claimant indicating that liability under workers compensation was wholly denied.

At the time of the Insurer’s internal review the claimant was informed that a claim for statutory benefits under the Act would be accepted if the claim with their employer’s workers compensation policy was wholly denied.

Legislation

In conducting my review, I have considered the following legislation and guidelines:

Legislative framework

The claimant has requested a merit review of the Insurer’s decision that they are not entitled to statutory benefits as the result of a failure to comply with a request by the Insurer to make an application for workers compensation.

Section 3.35(1) of the Act states:

An injured person is not entitled to statutory benefits under this Part if compensation under the Workers Compensation Act 1987 (workers compensation) is payable to the injured person in respect of the injury concerned (or would be payable if liability for workers compensation had not been commuted).

An insurer under the compulsory third-party insurance scheme has no capacity to determine directly whether workers compensation is payable to an injured person. The Act therefore provides direction to insurers in respect of payment of statutory benefits, where there is a potential claim for workers compensation. The direction is given under section 3.35(2) of the Act as follows:

The relevant insurer for a claim for statutory benefits under this Part is not entitled to refuse payment of statutory benefits under this Part on the grounds that workers compensation is payable in respect of the injury unless:

the injured person has made a successful claim for workers compensation in respect of the injury, or

the injured person has failed to comply with a request by the relevant insurer under this section to make a claim for workers compensation in respect of the injury.

There is no dispute between the parties that the claimant’ circumstances fall outside those described in section 3.35(2)(a). The question is therefore whether the claimant circumstances fall within the situation described in section 3.35(2)(b) of the Act.

Section 3.35(2)(b) of the Act refers to “a request by the relevant insurer under this section” [emphasis added]. Section 3.35(2)(b) does not give power to the Insurer to make any request for a claimant to make a claim for workers compensation. Such a request must be made in accordance with the section 3.35(4) of the Act, which states:

If the relevant insurer for a claim for statutory benefits under this Part considers on reasonable grounds that workers compensation is or may be payable in respect of the injury concerned, the insurer may require the injured person to make a claim for workers compensation in respect of the injury.

Any request relied on by the Insurer under section 3.35(2)(b) of the Act must therefore have been made in accordance with the provisions under section 3.35(4) of the Act.

Contact between the claimant and in insurer

There is a file note from the Insurer dated February 2018. The file note records some details of a conversation between the Insurer’s representative and the claimant. The Insurer’s representative notes that the claimant was very upset and started to cry during the conversation and that the representative:

“advised in this case they had to let the employer know as it (the accident) happened during work hours and that means they had to lodge the claim under workers compensation first, if that is rejected that means they can come back to consult CTP but we are unable to proceed with the claim unless they go through workers compensation first”.

The Insurer sent a letter to the claimant dated February 2018 in which it declined liability for the payment of statutory benefits for their injury. Relevantly the letter stated:

“As your accident occurred during the course of your employment, you’re entitled to personal injury benefits under the Workers Compensation scheme for the same incident and injury”.

The Insurer indicated that it used the information contained in an initial contact phone call with the claimant in which they purportedly said that the motor accident took place on their lunch break to make the above decision.

There was a further statement under the heading “What do I need to do now?” as follows: “We recommend that you contact your workers compensation insurer to discuss the next steps”.

There is a subsequent internal review dated April 2018 in which the Insurer has affirmed its decision.

The Insurer is not entitled to refuse payment of statutory benefits under Part 3 of the Act on the basis of the letter dated February 2018 or any subsequent correspondence before me. The letter of that date purported to decline liability for statutory benefitsfor the claimant on the basis that they have already failed to comply with a request to make a claim for workers compensation.

In its submissions, the Insurer has sought to rely on the letter of February 2018 as a request to the claimant that requires them to make a claim for workers compensation. The Insurer’s submission cannot succeed on two grounds.

In order to decline liability for statutory benefits in the letter dated February 2018 under section 3.35(2)(b) of the Act, the Insurer must already have required the claimant to make a claim under workers compensation and the claimant must have failed to do so. The suggestion that the claimant contact their workers compensation insurer that is contained in that letter, can therefore not be relied on by the Insurer as the basis that the claimant failed to comply with its request.

The second ground on which the Insurer’s submission must fail is that the language used in the letter dated February 2018 is not the language of a requirement. A requirement must not be open to misunderstanding and must be set out in words that are clear, with an explanation as to the source of authority that the Insurer relies on to impose the requirement. No such information was communicated to the claimant in the letter dated February 2018.

The relevant determination is whether the conversation between the claimant and the representative of the Insurer, which took place in February 2018, was sufficient that it can be said that the Insurer “required” The claimant to make a claim for workers compensation in respect of their injury in accordance with the power of the Insurer under section 3.35(4) of the Act.

Section 6.3(3) of the Act sets out the duty of Insurers to act with good faith as follows: The duty of an insurer to act with good faith includes the following duties:

The duty to provide a claimant with information about entitlements to statutory benefits and damages,

A duty to disclose all relevant information (including reports by health professionals) relied on to make a decision on a claim,

The duty to provide written reasons for all decisions that materially affect a claimant’s entitlement to statutory benefits or damages,

The duty to advise a claimant of any right under this Act to review any such decision of the insurer,

The duty to make prompt payment of statutory benefits and damages.

In the course of the telephone conversation in February 2018, the Insurer made a decision that the claimant was required to make a claim for workers compensation and purported to exercise its power to require them to do so under section 3.35(4) of the Act. This decision materially affected the claimant’ entitlement to statutory benefits. The language that is recorded in the file note of the Insurer’s representative does not meet the test of having communicated a Dispute Resolution Service, Merit Review Certificate & Reasons Page 8 of 9 requirement. The language is imprecise and does not specify any source of authority for imposing the requirement.

The Insurer failed to confirm that purported decision in writing, as required under Section 6.3(3)(c) for a decision of this nature. The first decision which was in fact communicated to the claimant in writing, was the decision that they were not entitled to statutory benefits. This decision is distinct from any decision that they were required to make a claim for workers compensation, and was relied on a supposed failure by the claimant to comply with that requirement.

Additionally, the Insurer did not disclose to the claimant all of the relevant information relied on to make its decision in relation to the requirement to claim workers compensation. Such information necessarily included information as to the relevant sections of the Act under which the requirement was made.

I therefore consider that the Insurer did not require the claimant to make an application for workers compensation, in accordance with section 3.35(4) of the Act, on the basis that it failed to communicate its decision in accordance with the obligations under section 6.3(3) of the Act.

As a result, I find that the correct and preferable decision in this matter is that the Insurer cannot rely on section 3.35(2)(b) of the Act to refuse payment of statutory benefits, at this stage.

I do however note that section 3.35(1) of the Act clearly states: An injured person is not entitled to statutory benefits under this Part if compensation under the Workers Compensation Act 1987 (workers compensation) is payable to the injured person in respect of the injury concerned (or would be payable if liability for workers compensation had not been commuted).

The question remains as to whether compensation is payable to the claimant under workers compensation. While the claimant’s legal representative has indicated that he does not consider that workers compensation is payable in this instance, the matter is not for the legal representative to decide, or for me to decide, but must be put to the relevant workers compensation insurer for their decision.

The claimant has indicated that they have lodged a claim for workers compensation via their employer. It would be preferable, in order to expedite the process of providing them with appropriate benefits, if they could provide details of the workers compensation claim to the CTP Insurer to follow up and clarify, provision for which is made under section 3.35(7) of the Act, or to obtain clear information from the workers compensation insurer that their claim has been wholly denied, which they should provide to the CTP insurer.

In considering my determination of this merit review, I have taken into account the following provisions of section 7.13(3) of the Act which provide;

(3) In determining a merit review application, the merit reviewer may decide:

(a) to affirm the reviewable decision, or

(b) to vary the reviewable decision, or

(c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision the merit reviewer set aside, or

(d) to set aside the reviewable decision and remit the matter for reconsideration by the insurer in accordance with any directions of the merit reviewer

In considering my determination of this merit review, I have also taken into account the objects of the Act and in particular sections 1.3(2)(g), 1.2(4) and 1.2(5) which provide;

(2) For that purpose, the objects of this Act are as follows:

(g) to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes

(4) In the interpretation of a provision of this Act or the regulations, a construction that would promote the objects of this Act or the provision is to be preferred to a construction that would not promote those objects.

(5) In the exercise of a discretion conferred by a provision of this Act or the regulations, the person exercising the discretion must do so in the way that would best promote the objects of this Act or of the provision concerned.

Determination

My determination of the Merit Review is as follows:

The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:

The Insurer may not refuse statutory benefits under Part 3 of the Act for the claimant on the basis of any of its interactions or correspondence with the claimant to date.

The Insurer requires the claimant to make a claim for workers compensation for the injury with the relevant workers compensation insurer, in accordance with section 3.35(4) of the Act, within 10 days of the date on which the claimant receives this determination. The reasons given for this merit review determination are the reasons for this substituted decision of the insurer.